China's Xi says annual growth of about 7 percent possible over next five years

Reuters Staff

4 Min Read

A worker walks past an entrance to a construction site of a business building at the Central Business District (CBD) area, in Beijing, China, October 26, 2015.Jason Lee

BEIJING (Reuters) - China can maintain annual economic growth of around 7 percent over the next five years but there are uncertainties, including weak global trade and high domestic debt, Xinhua news agency quoted President Xi Jinping as saying on Tuesday.

Annual average growth would be no less than 6.5 percent in the next five years to realize the country's goal of doubling 2010 gross domestic product (GDP) and per capita income by 2020, Xinhua quoted Xi as saying.

Chinese growth dipped to 6.9 percent in the third quarter, the weakest since the global financial crisis, hurt partly by cooling investment and prompting the central bank to cut interest rates and bank reserve requirements again.

"It's possible for China's economy to maintain growth of around 7 percent (over the next five years) but it also faces more uncertainties," Xi said, saying that main domestic and foreign research institutions believe China's potential growth could be between 6 and 7 percent in 2016-2020.

"Looking at the need to double GDP, the bottom line for annual average economic growth between 2016 and 2020 is more than 6.5 percent," Xi said.

Global trade was expected to remain sluggish and growth in China's consumption and investment could slow, and there may be risks from high debt levels, Xi said.

Development over the next five years should not focus just on the pace of growth, but also on the quality, Xi was quoted as saying, explaining a proposal for the country's 13th five-year plan, a blueprint for economic and social development between 2016 and 2020.

Top leaders have flagged a "new normal" of slower growth as it tries to shift the world's second-largest economy to sustainable, consumption-led development.

Premier Li Keqiang has said that China needs annual growth of at least 6.53 percent over the next five years. He was quoted by state radio as saying on Tuesday that environmental protection measures had contributed to the growth slowdown.

GROWTH TARGET AWAITED

Investors are waiting for the announcement of an economic growth target for the next five years. A communique issued after a key party meeting that discussed the five-year plan said China aims to keep the economy growing at "a medium-to-high rate" to achieve the goal of doubling GDP and per capita income.

Policymakers may face more challenges in deciding the long-term growth target given uncertainties in the global economy and signs of weakness in domestic demand, sources involved in policy discussions say.

The government may favor annual growth of between 6.5 percent and 7 percent for 2016-2020, some sources say. The growth target needs approval from parliament when it meets in March.

Xu Shaoshi, chairman of the National Development and Reform Commission (NDRC), the top planning agency, said China had the conditions to keep economic growth at a medium-to-high rate in the next five years.

Xu told a news conference that the government would give more attention to employment, incomes and consumer prices than economic growth figures.

The government will exceed the 7 percent target for the current 2011-15 five-year plan with growth averaging around 7.8 percent, official data shows. But growth has slowed markedly in that time, from 9.5 percent in 2011, to being on track for a quarter-century low of around 7 percent this year.